The Reserve Bank of Australia (RBA) has warned banks not to chase unrealistic profit targets by making staff cuts in important control areas, such as risk management, or over-extending themselves in new business lines and markets to compensate for slow credit growth.

"It would... be unhelpful if banks were to chase unrealistic profit expectations by taking on more risk – through lowering credit standards or expanding too quickly into new or unfamiliar markets – or by pursuing cost cutting in a